The 2022 Real Estate Market
Insight from Associate Real Estate Broker Jim LaValley
Go to any social event, diner, restaurant or read any newspaper, magazine, or listen to the radio or watch television and you realize that one of the most talked about topics these days, is the real estate market. And there are three categories that are most often asked:
- “What’s going on with pricing?”
- "Should there be concern over affordable housing?”
- "Are we in a real estate bubble?”
As to the first question – what’s going on with pricing? Similar to other areas of the country, the Adirondacks and Northern New York have seen one of the largest price increases in history, since the pandemic. Having been in the business for forty years, I have seen the rise and fall of real estate values in the 80’s, 90’s, and 2000’s. For most who are listening or reading this, you will recall the rise of prices in the 2005 to 2007 time period, only to see a market crash in 2008. But this time is different.
The 2008 crash was related to the mortgage markets. It seemed that any warm body could get a mortgage then. With the lessons learned, and the passing of the Dodd Frank Bill, mortgage lending tightened up. The markets worked their way back over the next several years, with little blips here and there, but when the pandemic hit in 2020, those of us in the industry thought that another big crash was going to happen. Boy, were we wrong!
Beginning in the third quarter of 2020, there was a large increase in buyer demand. That demand created a few interesting trends – first, average prices increased by 20+ percent. Second, in forty years I have never seen so many multiple offers on properties, and many of them cash offers. Third, inventory was not coming online, as things sold. While homeowners knew they could get top dollar, they were also aware that they would pay top dollar to purchase something else. So, many chose to stay put. This created a lack of inventory.
So, with those things in mind, I don’t feel we are in a housing bubble. Not when you consider tighter lending conditions, the number of cash offers, the lack of inventory, and continued demand. As of this writing, it is estimated that the United States has a housing shortage in the vicinity of 4 million units. That shortage is obvious in the Adirondacks and North Country. Along with that, the issue with building new units - is that the cost per square foot has jumped dramatically due to supply and labor issues. When new construction is projected at approx. $250 to $300 per square foot for a “plain vanilla” house, that means a 1500 square foot house would cost approximately $400,000. That is not affordable for the average resident in our area. This housing shortage had its beginnings in the burst housing bubble in 2008, which led to the collapse in new home building.
Home-buying is also enjoying a demographic surge with a large millennial generation now in their early 30s, an age period when previous generations have purchased first homes. For economic and social reasons, the millennials may take a bit longer to become homeowners, but single-family housing demand will continue to get a boost from this trend through at least mid-decade.
So, are we in another housing bubble and is it a good time to sell? No, we are not in a bubble and yes, there has never been a better time to sell! If you are at that point where you have thought about selling, think about this… buyer demand remains high. Pricing is at an all-time high but stabilizing. Seize the moment and know that this is an opportune time.
Whether you own a village home, second home, lakefront, land, or even investment property, we would welcome the opportunity to share more.
Jim LaValley is an Associate Broker with Coldwell Banker Whitbeck and has been involved in Adirondack/North Country Real Estate for forty years. As a fourth generation Adirondacker, his achievements, credentials and drive have earned him professional recognition. His love of the Adirondacks and North Country have provided his buyers their dream home and sellers top return on investment. From brokerage to real estate development projects, Jim has been involved personally on a local, regional, national, and international level. Jim can be reached at firstname.lastname@example.org